Egypt’s net international reserves (NIRs) witnessed a slight increase during October to reach $39.2 billion, up from $38.4 billion recorded in September, the Central Bank of Egypt (CBE) announced on Tuesday.
In September 2019, Egypt’s NIR recorded an all-time high of $45.117 billion; before witnessing a significant drop in March 2020, reaching $40 billion, driven by the unprecedented blow to global financial markets arising from the COVID-19 pandemic. COVID-19 has caused the sharpest portfolio flow reversal on record from emerging markets, including the Egyptian market, according to the CBE.
As of the end of June, Egypt’s NIR started to bounce back for the first time since March, increasing to $38.2 billion, up from $36 billion in May.
CBE Governor Tarek Amer said in previous statements that mid-June witnessed a strong return of foreign investors to the Egyptian financial market, in light of the global market recovery and the successful efforts done by the Egyptian government to contain the pandemic and its repercussions.
He also said that the treasury bill auctions have managed to attract 10 percent of foreign investments since June, adding that the Egyptian pound's performance against the US dollar has improved since the beginning of 2020 by 0.66 percent, unlike other currencies in the emerging markets.
Around $10 billion, out of $20 billion, returned to the Egyptian market after exiting it, from March through June, amid the onset of the COVID-19 pandemic, Goldman Sachs said in a recent report.
The report predicted Egyptian expat remittances would see an improvement that will enhance the country’s NIR.
Egypt’s NIR is expected jump to $43 billion in 12 months’ time, according to Trading Economics (TE).
In the long-term, TE expects Egypt’s NIR to trend around $45 billion in 2021 and about $46 billion in 2022.
Egypt is expected to receive the second tranche of the stand-by agreement loan approved by the International Monetary Fund in the summer of 2021.
In June, Egypt was handed the first tranche, worth $2 billion out of $5.2 billion, while it is expected to receive $3.2 billion after reviews that are anticipated to be carried out in December 2020 and June 2021.
In a recent report, the World Bank expected Egypt to become the top recipient of remittances in the Middle East and North Africa region in 2020 to receive $24.4 billion, which accounts for 6.7 percent of the country’s GDP.